Offline and On Notice: CSR and Profitability in the Wake of Egypt's Cyber-Blackout

Egypt's recent government-ordered Internet shutdown has thrown its almost 80 million citizens into cyber-darkness. For foreign companies doing business or considering doing business in the Arab republic, the current situation poses some serious questions regarding profitability and corporate social responsibility.

For decades, foreign companies have been enjoying relative peace and prosperity in Egypt, a strong U.S. ally that has been the recipient of some $2 billion in American aid every year since the 1979 Egypt-Israel Peace Treaty.

In 2006, foreign direct investment (FDI) surpassed the $10 billion mark, thanks to the liberal economic policies championed by Mahmoud Mohieldin, Egypt's former investment minister, now a managing director of the World Bank Group.

CONFLICT ZONE CSR = "CSR+"

Oh, what a difference a week makes. For many firms with operations in the Arab nation, smooth sailing down the Nile has changed to nervously navigating the murky waters of operational instability and "conflict zone CSR" (what Diana Klein of the London-based peacebuilding NGO International Alert called "CSR+" in an interview with Germany's CSR WeltWeit) in the wake of the recent and ongoing political upheaval.

Just after midnight local time on Thursday, as protests raged across the country, President Hosni Mubarak ordered Egypt's ISP's to shut down their services, abruptly throwing his country into a cyber-lockdown and many businesses into a legal and ethical quagmire that pits them between their various stakeholders -- customers, shareholders and the government that allows them to be there in the first place.

"Egypt is a modern country; the government doesn't own the Internet," said James Cowie, co-founder and CTO of the New Hampshire-based Internet intelligence firm Renesys, according to the Los Angeles Times. "There are private companies of varying sizes that own and operate their own infrastructure. But it seems that they got a call and so they turned it off."

"Approximately 3,500 individual BGP (border gateway protocol) routes were withdrawn, leaving no valid paths by which the rest of the world could continue to exchange Internet traffic with Egypt's service providers," Cowie wrote on the Renesys blog on Friday. "Virtually all of Egypt's Internet addresses are now unreachable, worldwide."

DOING BUSINESS IN REPRESSIVE REGIMES

ISP's and other telecommunications companies operating not only in Egypt but in other other authoritarian-led countries should now consider themselves on notice as they come to terms with the fact that their businesses can be interrupted if a government wants to block dissident voices or suppress a popular revolt. Mubarak's unprecedented blackout of Internet, mobile and SMS services added fresh tinder to the longstanding debate concerning firms operating abroad: Is it socially responsible to do business with repressive regimes?

"Egypt's information blackout is an extreme step designed to disrupt planned marches, to block images of police brutality, and to silence dissent once and for all," said Joe Stork, deputy Middle East and North Africa director at Human Rights Watch. "But the shuttering of the Internet and most telecommunications by the Egyptian government also means that the government can take unmonitored action against its citizens, which poses a dire threat to human rights."

COMPLYING WITH THE CYBER-BLACKOUT

Unsurprisingly, some telecoms have distanced themselves from the blackout. "We didn't block Twitter," posted Vodafone Egypt on their own Twitter account on January 25. "It's a problem all over Egypt and we are waiting for a solution."

But then on Friday, the British-based Vodafone Group PLC -- which holds a contract with the Egyptian government for its technology infrastructure -- released a statement that confirmed that they, like other mobile operators, were "instructed to suspend services in parts of Egypt. Under Egyptian legislation, the authorities have the right to issue such an order and we are obliged to comply with it."

Also on Friday, the non-profit lobbying group Free Press issued a statement that claimed the "Boeing-owned, California-based company Narus sold Telecom Egypt, the state-run Internet service provider, 'real-time traffic intelligence' equipment, more commonly known as Deep Packet Inspection (DPI) technology. DPI is content-filtering technology that allows network managers to inspect, track and target content from Internet users and mobile phones as it passes through routers on the Web," according to the Wall Street Journal.

THE ABUSE OF TECHNOLOGY

"What we are seeing in Egypt is a frightening example of how the power of technology can be abused," said Free Press Campaign Director Timothy Carr. "Commercial operators trafficking in Deep Packet Inspection technology to violate Internet users' privacy is bad enough; in government hands, that same invasion of privacy can quickly lead to stark human rights violations."

"Companies that profit from sales of this technology need to be held to a higher standard," Carr said. "The same technology U.S. and European companies want to use to monitor and monetize their customers' online activities is being used by regimes in Iran, China, Burma and others for far more suspicious, and possibly brutal, purposes."

The difficulty of implementing CSR policies in conflict zones is evident. But the recent events in Egypt -- which until last week was a safe and stable place to do business -- have put into sharp focus the difficulty of implementing CSR policies in nations that are not necessarily conflict zones, but are governed by repressive regimes.

As the curfew-defying residents of Cairo and Alexandria have so vividly displayed, even an iron fist can suddenly be forced open. And as many businesses in Egypt now know, that can lead to abrupt, profit-killing, government-ordered shutdowns of their operations. For firms considering opening up shop in such volatile or potentially volatile regions around the globe, perhaps being socially responsible and keeping the lights on are just two sides of the same coin.

image: Reynard Loki